The Blackstone Group Inc. (NYSE: BX)
Blackstone Inc. is an American alternative investment management company based in New York City and was founded in 1985. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate business has actively acquired commercial real estate. It had $941 billion of assets under management (AUM) at the end of the third quarter. With its recent successes, the company has seen an increase in mentions by 147% over the last day, prompting investors to wonder if they should take a position in the company now. Currently, shares of Blackstone trade at $101.59 per share.
There are multiple reasons why this stock should be on your radar at the moment, some of them are as follows.
A large portion of the company's AUM ($683.8 billion at the end of the second quarter) generates recurring management fees. Overall, it tallied $1 billion of fee-related income in the second quarter and $4.8 billion over the last 12 months.
As fee-bearing AUM rises, so do fee-related earnings. They were up 37% and 45%, respectively, in the second quarter.
The company generated $1.3 billion of net realizations in the second quarter, up 156% year over year.
After subtracting taxes and interest payments, Blackstone generated $2 billion of distributable earnings in the second quarter, an 86% increase, bringing its total to $7.9 billion over the past year.
Blackstone has also accrued another $7.5 billion of performance revenue (up 11%) that it will realize in the future, providing visibility into this more variable revenue stream.
Blackstone distributed $1.9 billion to shareholders in the second quarter, pushing its total to $7.9 billion over the past year.
Although its dividend payments fluctuate, the dividend yield has averaged 5% over the last 12 months.
Blackstone certainly looks like it is taking advantage of this momentum, with $88 billion in capital inflows during the second quarter of 2022 (its second-highest quarter ever) and a massive $340 billion over the past year.
Alternative assets under management by companies like Blackstone have grown from $4.1 trillion in 2010 to almost $12 trillion last year. They should continue growing at a healthy pace, with Preqin, a leading alternative asset data provider, estimating that they'll reach $17.2 trillion by 2025, a 9.8% compound annual growth rate.
Although the Blackstone Group has generated a lot of positive hype, there is still a reason to be precautious before taking a position in the company. Here is one of them.
Given the recent rise in interest rates, there is a chance that risk appetite in the market and the company's ability to successfully sell the asset are both reduced, meaning that in case this continues, then it could negatively affect Blackstone, especially with leveraged buyouts.
Given its recent drop in price, Blackstone seems like a stock to buy right now. It has strong financials, provides great returns to shareholders and is a leader in its market that only seems to be growing even despite current economic conditions. Although the stock itself is on the more expensive side, it seems worth considering taking a position now.
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